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Who is Willing to Let Ethics Guide His Economic Decision-Making? Evidence from Individual Investments in Ethical Funds

  • Säve-Söderbergh, Jenny

    ()

    (Swedish Institute for Social Research, Stockholm University)

Recent economics literature has devoted attention towards motives beyond the typical selfish norm for economic decision-making. Yet, it still remains a puzzle who allows such considerations to govern their behavior. This paper contributes by empirically identifying some features which differentiate individuals who choose to bear the cost of ethically guided economic decision-making from others. Using unique Swedish data on individual pension portfolio choices, we find that education, the choice of an occupation that is committed to taking care of others, actively joining a group working for a common cause, clearly predict the choice of an ethical screen for individual investments.In contrast to previous findings on altruism, income, financial wealth and age do not govern the decision. The results therefore suggest that investing ethically is typically a choice of principles.

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Paper provided by Swedish Institute for Social Research in its series Working Paper Series with number 7/2005.

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Length: 37 pages
Date of creation: 24 Nov 2005
Date of revision:
Publication status: Published as Säve-Söderbergh, Jenny, 'Who is Willing to Let Ethics Guide His Economic Decision-Making? Evidence from Individual Investments in Ethical Funds' in Economics Letters, 2010, pages 270-272.
Handle: RePEc:hhs:sofiwp:2005_007
Contact details of provider: Postal: SOFI, Stockholm University, SE-10691 Stockholm, Sweden
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  1. Engström, Stefan & Westerberg, Anna, 2003. "Which individuals make active investment decisions in the new Swedish pension system?," SSE/EFI Working Paper Series in Economics and Finance 527, Stockholm School of Economics, revised 21 Jul 2003.
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  7. Andreoni, James & Vesterlund, Lise, 2001. "Which is the Fair Sex? Gender Differences in Altruism," Staff General Research Papers 1951, Iowa State University, Department of Economics.
  8. Leslie Moscow McGranahan, 2000. "Charity and the Bequest Motive: Evidence from Seventeenth-Century Wills," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1270-1291, December.
  9. Richard B. Freeman, 1996. "Working for Nothing: The Supply of Volunteer Labor," NBER Working Papers 5435, National Bureau of Economic Research, Inc.
  10. Harbaugh, William T, 1998. "The Prestige Motive for Making Charitable Transfers," American Economic Review, American Economic Association, vol. 88(2), pages 277-82, May.
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  13. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  14. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-77, June.
  15. Fischbacher, Urs & Gachter, Simon & Fehr, Ernst, 2001. "Are people conditionally cooperative? Evidence from a public goods experiment," Economics Letters, Elsevier, vol. 71(3), pages 397-404, June.
  16. Engstr M, Stefan & Westerberg, Anna, 2003. "Which individuals make active investment decisions in the new Swedish pension system?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 2(03), pages 225-245, November.
  17. Dufwenberg, Martin & Muren, Astri, 2002. "Discrimination by Gender and Social Distance," Research Papers in Economics 2002:2, Stockholm University, Department of Economics.
  18. Gary E. Bolton & Rami Zwick & Elena Katok, 1998. "Dictator game giving: Rules of fairness versus acts of kindness," International Journal of Game Theory, Springer, vol. 27(2), pages 269-299.
  19. Guiso, Luigi & Jappelli, Tullio & Terlizzese, Daniele, 1996. "Income Risk, Borrowing Constraints, and Portfolio Choice," American Economic Review, American Economic Association, vol. 86(1), pages 158-72, March.
  20. Henrik Cronqvist & Richard H. Thaler, 2004. "Design Choices in Privatized Social-Security Systems: Learning from the Swedish Experience," American Economic Review, American Economic Association, vol. 94(2), pages 424-428, May.
  21. Alicia H. Munnell & Annika Sunden, . "Investment Practices of State and Local Pension Funds: Implications for Social Security Reform," Pension Research Council Working Papers 99-9, Wharton School Pension Research Council, University of Pennsylvania.
  22. Laitner, John & Juster, F Thomas, 1996. "New Evidence on Altruism: A Study of TIAA-CREF Retirees," American Economic Review, American Economic Association, vol. 86(4), pages 893-908, September.
  23. Armin Falk, 2004. "Charitable Giving as a Gift Exchange – Evidence from a Field Experiment (new title: Gift-Exchange in the Field)," CESifo Working Paper Series 1218, CESifo Group Munich.
  24. Plantinga, Auke & Scholtens, Bert, 2001. "Socially responsible investing and management style of mutual funds in the euronext stock markets," Research Report 01E17, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
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